In a blog post written shortly after his Defcon talk, Marlinspike explained his interest in MS-CHAP v2 (Microsoft Challenge Handshake Authentication Protocol version 2). "Even as an aging protocol with some prevalent criticism, it's still used quite pervasively," Marlinspike said. "It shows up most notably in PPTP VPNs, and is also used quite heavily in WPA2 Enterprise environments."

At the same time, Marlinspike published "Chapcrack," a tool that parses data for passwords encrypted with MS-CHAP v2, then decodes them using the CloudCracker password cracking service.

Microsoft acknowledged the threat. "An attacker who successfully exploited these cryptographic weaknesses could obtain user credentials," the Monday advisory stated. "Those credentials could then be re-used to authenticate the attacker to network resources, and the attacker could take any action that the user could take on that network resource."

MS-CHAP v2 is used to authenticate users in PPTP-based (Point-to-Point Tunneling Protocol) VPNs. Windows includes a built-in implementation of PPTP.

To use Chapcrack, an attacker must first capture data packets being transmitted over a VPN or Wi-Fi. The most likely scenario: Spoofing a legitimate wireless hotspot, say at an airport, to sniff out VPN or other traffic, then grab it out of the air.

But Microsoft won't ship an update to fix the problem. "This is not a security vulnerability that requires Microsoft to issue a security update," Monday's advisory read. "This issue is due to known cryptographic weaknesses in the MS-CHAP v2 protocol and is addressed through implementing configuration changes."

Instead, Microsoft recommended that IT administrators add PEAP (Protected Extensible Authentication Protocol) to secure passwords for VPN sessions. A support document described how to configure servers and clients for PEAP.

As Marlinspike noted, MS-CHAP v2, which harks back to Windows NT SP4 and Windows 98, has been denounced as insecure for years, primarily because it's been vulnerable to "dictionary" attacks, where hackers try large numbers of possible passwords.